Individual pension plan is a retirement benefit arrangement designed on a defined contributory basis where by the growth of the benefit is made up of the amounts contributed and the interest accrued. The main objective of this scheme is to help individuals save for their retirement. The plan is registered with both the Retirement Benefits Authority (RBA) and the Kenya Revenue Authority (KRA) hence members can enjoy tax privileges on their benefits.
How Individual Pension Plan works.
You will contribute an amount of money, which is then invested towards building your retirement fund. The contributions may not necessarily be a proportion of your income. However, it is advisable for you to contribute a percentage of your earnings
(Subject to a tax deductible limit of 30% of salary/earnings) so that your ultimate benefits would reflect your previous earnings to help preserve the standard of living you enjoyed before retirement. Contribution payments can be made monthly, quarterly, half yearly, annually or on ad hoc basis to suit your income streams. You can choose to pay the contributions through personal cheque, standing orders to our bank to deduct and remit to us contributions, direct debit authority to allow us debit your account with the contribution amount, payroll deduction from employer, M-Pesa and cash payments receipted at our head or branch offices.
> Anyone who is employed or self employed may open an IPP.
> Any one who is a member of an occupational scheme (employer sponsored) who would wish to supplement with the IPP.
The contributions you make to this arrangement reduce your income due for taxation as it is deducted before tax. The maximum tax deductable on contributions is the lesser of Ksh 20,000 per month (240,000 per year) or 30% of your pensionable income.
On payment of benefits, tax exemption is also available which is directly linked to the number of years you are in the scheme. The pension benefit payable to you on or after your 65th birthday is tax free.
Mode of Investment.
Total contributions and past returns are guaranteed by Pioneer Assurance. The funds in the individual pension accounts are invested in a guaranteed fund which ensures that your accumulated contributions plus interest are protected from capital erosion.
Access of Benefits
Access of the retirement benefits savings is regulated under the Retirement Benefits Act. Early retirement is possible at age 50. You may also access your money on early withdrawal (only benefits secured by member contributions and half of employer contributions and interest). The remaining benefits secured by employer’s contributions will be preserved until retirement age. This preserved benefit can also be accessed before retirement when an IPP client is emigrating to another country or in case of ill health.
|2010||2011||2012||2013||2014||5 – Year Average|
Pioneer 5 Year Average: 10.56%
Why consider Pioneer Individual Pension Plan
- It is flexible to suit your ability to contribute towards your retirement savings
- Tax benefits both at the time of contributions\savings and also when cashing in the final benefits.
- The Minimum guaranteed interest rate of 4% per annum.
- If the declared rate is higher than 4% we will pay the higher rate. The difference in guaranteed interest and declared interest is paid as a bonus to all clients.
- Annual fund value statements issued to all members.
- Flexibility on the side of the member to increase the amount of contributions.
- The Individual Pension Plan is portable and can be transferred to another scheme of a client’s choice, subject to terms and conditions in the policy document.
- Premiums can be paid as single lump sum or at regular intervals.
- May provide a financial cushion when a member looses their job\income
- Invaluable tool for disciplined and long term savings for retirement
- The IPP will enable you as a retiree to be self-supporting
Frequently Asked Questions (FAQs)
- Are there any risks I need to know about?
Your money will be invested as part of the Pioneer pooled funds in a balanced portfolio and Pioneer guarantees your contributions and minimum interest rate.
- Can my employer also contribute?
Your employer can contribute towards your individual pension plan. All you need is to advise us on breakdown between your contributions and the employer’s.
- What happens if for various reasons I can’t continue with regular contributions?
The contributions you have already made to the plan will continue to earn interest and you can restart your contributions when your financial situation allows in future. Otherwise your account will continue to be credited with interest until early withdrawal or retirement date.
- Are my contributions to the Individual Pension Plan tax deductible?
Yes. The PIONEER Individual Retirement Benefits Plan is registered with both Retirement Benefits Authority and Kenya Revenue Authority and contributions made into the plan attract the same tax treatment as other registered retirement benefits schemes.
- What happens to my savings if I die before I retire?
Your benefits will be paid to nominated beneficiaries.
- Can I transfer my pension fund to another?
Yes, it’s possible to transfer your fund to any other registered pension scheme.
- Can I withdraw my fund from Pioneer before retirement?
You may terminate the contract and withdraw the fund at any time. However this will be subject to the relevant termination charges as indicated in your policy document and taxes payable as per the relevant taxation laws.
- When is the retirement benefit paid?
When you attain the normal retirement age of 65; or any other age not less than the minimum retirement age of 50 years.
- How is my retirement benefits paid?
Your retirement can either be paid as a lump sum, or a pension secured by purchasing an annuity from Pioneer or from the market. You can also take your benefits in form of installments over a period of time.
- How to get started?
Download the application form and attach a copy of your ID.